Discovery Limited Announces Annual Financial Results: Emphasises Strategy for Continued Investment in South Africa and Abroad

ACCESSWIRE11 Sep 2019, 02:43 GMT+10

JOHANNESBURG, SOUTH AFRICA / ACCESSWIRE / September 10, 2019 / Financial services group, Discovery Limited delivered its annual results for the year ended 30 June 2019. In its home market South Africa, Discovery operates in the healthcare, life assurance, short-term insurance, banking and investment markets, applying its shared-value model to improve people's behaviour for the benefit of society, the company and its clients. With experience incentivising people to improve their behaviour, Discovery has become a global leader in shared-value, with its Vitality model now present in 21 countries reaching over 10 million clients.

Discovery Chief Executive, Adrian Gore, described the Group's performance as resilient in the context of a complex year, with operating profit increasing 3% and 94% respectively across its established and emerging sets of businesses.

The Group has a number of emerging businesses, those that are approximately five years or more into their launch with sufficient scale to be profitable, which include the Vitality Group and Discovery Insure. Vitality Group is responsible for the expansion of the Vitality Shared-Value model beyond South Africa and the United Kingdom, and made excellent progress in establishing a sophisticated behavioural platform linked to financial services, reporting profit growth of R161 million, up 71% from the previous year.

John Hancock, an insurance partner for Vitality in the United States, has seen a marked increase in sales of its Vitality-linked insurance solutions. President Chief Executive Officer of John Hancock, Brooks Tingle, explains: 'Vitality-linked life insurance has changed our relationships with our customers. In the past, we would engage in sending a bill or an annual statement. Today, we're interacting with our clients as many as 40 times a month and these interactions are very positive. Clients are being rewarded and engaging with educational content - a complete change to what it means to own life insurance. We're convinced that Vitality is going to be a central part of our strategy long into the future. It's a wonderful way to help our customers live healthier lives as we improve our bottom line and contribute in a positive way to society.'

Short term insurance provider in South Africa, Discovery Insure, which encourages people to drive more safely, reported a full-year profit of R155 million, up 128% from the previous year. Illustrating the global relevance of Discovery Insure's driver-behaviour change model, SoftBank Vision Fund invested US$500 million in Discovery Insure's telematics partner, Cambridge Mobile Telematics. This resulted in a pre-tax profit recognised of approximately US$56 million.

Adrian Gore said of the Group's performance in the context of its home market: 'The period was one of prudence, disciplined growth and a focus on deepening the strength of our behavioural composite business model.As testament to our commitment to build even in difficult times, we invested 21% of earnings in our strategic initiatives over the year, most notably Discovery Bank, the world's first behavioural bank. This investment created an expected reduction in earnings but also generated pleasing growth, reflected in the 13% increase in new business annualised premium income and traction of new initiatives in both our South African and international markets.'

New entrant into South Africa's well-respected banking sector, Discovery Bank, which encourages and rewards clients for better financial decisions, came to market in June 2019. This behaviour-change banking model guides clients to increased savings, lower financial risks and increased prosperity. As a new category of banking, Discovery Bank has focused on developing reward structures, introducing innovations such as dynamic interest rates which flex to reward people who manage their money well.

Discovery Health, among the Group's established businesses, had an excellent year. Operating profit increased by 10% to R3 044 million. The business also made progress on its objective of becoming the leading provider of integrated healthcare solutions to corporate clients in South Africa.

Following the recent publication of the National Health Insurance (NHI) Bill in South Africa, which carried some ambiguity on the future role of private healthcare in the country, the Group said it is committed to collaborating constructively with the Department of Health. 'We support the NHI bill, however, we strongly believe that there is a critical role for medical schemes and for private healthcare professionals alongside the NHI, as with every other country that has a successful national healthcare system. We do not expect any material long-term impact on the Discovery Health business and are hopeful it may, in fact, provide new opportunities for growth and innovation,' said Gore.

Vitality UK, offering health and life assurance and investment products in the United Kingdom, grew its operating profit by 15% to Pound 73 million. The lower interest rate environment in the UK hampered VitalityLife. The life insurer remained focused on innovation however and introduced a world-first product covering Alzheimer's disease and dementia, which since its launch has had an average take-up of 63%.

Partner to Discovery in China, Ping An Health achieved remarkable growth in revenue of 74% to RMB8.6 billion and new business premium grew more than 67% to RMB4.9 billion. This business expanded its branch footprint and enhanced the online offering and Ping An Health app, which now has 12 million registered users.

Gore said the Group remains well positioned for growth. 'Discovery is well capitalised for our five-year planning horizon and for continued growth through the combination of robust established businesses, scaling emerging businesses and new initiatives. Supported by further improvement in capital metrics, we expect to return profit growth to our stated goal of CPI +10%, while making ongoing investments in our businesses through their start-up phase. The current investment rate of 21% will decrease toward the long-term goal of 10% over the next few years,' Gore concluded.